RNS Number:7919P
Baltimore Technologies PLC
16 September 2003
Baltimore Technologies plc announces significant reduction in losses for 6
months ended June 2003
London, UK - September 16, 2003 - Baltimore Technologies (London:BLM),
("Baltimore") today announced its interim results for the six months ended 30
June 2003.
Highlights:
* Total revenues for H1 were #9.7 million (H1 2002: #22.1 million).
* Revenues for continuing operations were #9.3 million (H1 2002:
#13.2million)
* LBITDAE (Loss before interest, tax, depreciation, amortisation and
exceptional items) were reduced to #2.2 million from #9.9 million in H1
2002.
* Non-cash write-offs totalled #6.3 million, following amortisation charge
and impairment of goodwill and investments (#20.4 million in H1 2002).
* Cash Balance of #14.6 million at 30 June 2003 (H1 2002: #23.1 million). A
further #15.9m in gross proceeds is expected from the sales of SelectAccess
(#8.3m), OmniRoot (#2.0m), the managed services operations (approximately
#1.1m) and the settlement with Clearswift (#4.5million).
* Net operating cash outflow reduced to #3.5 million from #9.4 million in
H1 2002.
* Headcount has been reduced to 255 as at 30 June 2003 (H1 2002: 422).
* Major contract wins include the Saudi Arabian Monetary Authority, the
Government of Finland, Hong Kong Post Office and Intelink.
Bijan Khezri, Chief Executive of Baltimore Technologies plc commented:
"During the reported period, we succeeded in cutting our losses further and
continued to demonstrate the outstanding competitiveness of our core PKI
business by winning some of the world's leading e-government projects.
We will continue generating cash through divestments and further reduce the cash
burn of existing operations. We will not tolerate any operational cash burn
beyond the end of the year and are prepared to deploy all available means to
maximise value for our shareholders."
Chairman's Statement
Overview
After consideration of the strategic positioning of the Company, the Board
announced on 22 May 2003, a controlled sale process, inviting offers for the
whole of the Company. That process is now closed as it did not result in an
appropriate offer. However, during the process it was clear that there was
interest from various parties in elements of the business. Ongoing discussions
have so far concluded in the announcement of the sale of three parts of the
business.
The SelectAccess business has been sold to HP for a total consideration of #8.3
million in cash and we expect this transaction to close in September. Baltimore
has also sold its managed services related operations to beTRUSTed for
approximately #1.1 million. This transaction has now closed. In addition,
Baltimore has sold its OmniRoot business to beTRUSTed for a total of #2.0
million and this transaction is expected to close within the next eight weeks.
Following the controlled sale process, we expect that the shape and structure of
the business and the company is likely to continue to change during the course
of the next months. We are committed to achieving the best possible outcome for
our shareholders.
The continued reduction of overheads and expenses has meant that, despite lower
revenues than hoped for, Baltimore can report that cash burn and losses have
been reduced in line with our expectations. Cash balances reduced by #3.3
million resulting in cash at bank of #14.6 million, with further funds to come
from disposals announced after 30 June 2003. This will support our core PKI
business, which continues to win important and prestigious new contracts.
Financial Highlights
As in previous periods, the disposals made during 2002 make a true comparison of
the Group's performance difficult. To help make the comparison, the 2002 figures
are split to show the "discontinued" operations.
Total revenues for H1 2003 were #9.7 million and revenues for the continuing
business were #9.3 million. This represents a decrease of 56% (#12.4 million)
from #22.1 million in H1 2002. Excluding the #8.5 million fall in revenue due to
the discontinued businesses, the continuing business revenues fell by 29% (#3.5
million) from #13.2 million in H1 2002. The major reduction was in the higher
margin licence fee revenue which fell from a "continuing" #4.7 million to #2.0
million. Professional Services, which include new licence implementation,
accounted for #1.0 million of the remaining fall in revenue. Continuing service
and support revenue for H1 2003 of #3.9 million showed a 15% increase from #3.4
million in H1 2002.
Gross profit margin of 53% is down 4.0% from 57%, 3.5% of this is due to the
transfer of our hardware sales to third party status. The balance is due to the
mix of revenue with a lower proportion of high margin licences sold.
LBITDA (before exceptionals) of #2.2 million improved from #9.9 million in H1
2002, due to the reduced cost base and operating efficiencies. Total operating
expenses before exceptional items for H1 2003 were #11.1 million representing a
decrease of 71% from #38.6 million in 2002. For continuing operations the
reduction was from #30.0 million to #10.5 million, a decrease of 65%. This
decrease includes a reduction of amortisation charges from #13.1 million to #2.3
million. Excluding both exceptional charges and amortisation, operating expenses
reduced from #25.4 million to #8.8 million. Exceptional charges in the period
included #4.0 million arising from the writedown of the value of investments.
Agreement has been reached with Clearswift Ltd on the outstanding elements of
the consideration for the sale of Content Technologies last year. The value of
the investment in Clearswift, as at 30 June 2003, has been reduced to #2.0
million. The Company expects to receive #4.5 million by 30 September 2003 in
respect of that investment and in final settlement of warranty claims. In order
to retain an interest in Clearswift's potential, Baltimore will also receive
#300,000 in warrants.
The Company had a cash balance of #14.6 million at the end of the period. The
cash outflow of the period was #3.3 million which included an outflow of #3.5
million from operations.
Management Changes
Simon Enoch, who served as Company Secretary and General Legal Counsel, left the
Company at the end of July 2003. We are very pleased to retain him as a
non-Executive Director. Phil Smith, Chief Financial Officer, has taken over the
role of Company Secretary.
Chief Executive's Report
Business Highlights
The first half of 2003 has been a period of significant consolidation and change
for Baltimore. During the first half of the year, our leadership in the PKI
infrastructure market has been further reinforced through significant customer
wins in our core Government and Finance markets throughout the world. Baltimore
Technologies is effectively the world's leading high end PKI security company in
Government and Finance.
These customer wins include the Saudi Arabian Monetary Authority, the Finnish
Population Register Centre, Intelink and Hong Kong Post. All of these projects
are critical infrastructure projects requiring a highly scalable, policy-based
security infrastructure, with flexible registration features that are capable of
supporting a national roll-out.
In addition, Baltimore UniCERT was the first combined product and managed
service to be certified by the US Federal Bridge Certification Authority.
The Way Forward
While we have succeeded in consolidating our position as the leading high end
security infrastructure player, we continue to believe that Baltimore
Technologies' long term competitiveness requires critical mass. We continue to
evaluate all possible options to achieve this.
In addition to our employees, our customers represent Baltimore's most critical
asset. We are supporting around 300 of the world's leading electronic security
infrastructures. We will make use of all possible means to preserve and grow
this valuable asset.
Whilst our cash balance provides us with a high level of flexibility we will not
tolerate any operational cash burn beyond the end of the year. Therefore, we
will implement a further reduction in headcount throughout our worldwide
operations.
We will continue generating cash through divestments and further reduce the cash
burn of existing operations. I look forward to updating our stakeholders in due
course.
- Ends -
About Baltimore Technologies
Baltimore Technologies' products, services and solutions solve the fundamental
security and trust needs of e-business. Baltimore's e-security technology gives
companies the necessary tools to verify the identity of who they are doing
business with and securely manage which resources and information users can
access on open networks. Many of the world's leading organisations use
Baltimore's e-security technology to conduct business more efficiently and cost
effectively over the Internet and wireless networks. Baltimore also offers
worldwide support for its authorisation management and public key-based
authentication systems.
Baltimore's products and services are sold directly and through its worldwide
partner network, Baltimore TrustedWorld. Baltimore Technologies is a public
company, principally trading on London (BLM). For more information on Baltimore
Technologies please visit http://www.baltimore.com
For further information:
Smithfield Financial 020 7360 4900
Andrew Hey 020 7903 0676
Nick Bastin 020 7903 0633
Will Swan 020 7903 0647
###
Certain statements that are not historical facts including certain statements
made over the course of this document may be forward-looking in nature. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance and achievements of
the Company to be materially different from any future results, performance or
achievements implied by such forward-looking statements.
Unaudited interim condensed consolidated profit and loss account
Continuing Discontinued Continuing Discontinued
Operations Operations Total Operations Operations Total
Six months to Six months to Six months to Six months to Six months to Six months to
30 June 30 June 30 June 30 June 30 June 30 June
2003 2003 2003 2002 2002 2002
#000 #000 #000 #000 #000 #000
Notes
Revenue 2a 9,340 320 9,660 13,231 8,834 22,065
Cost of sales (4,386) (153) (4,539) (5,644) (3,779) (9,423)
Gross profit 2b 4,954 167 5,121 7,587 5,055 12,642
Administrative
expenses (10,467) (621) (11,088) (29,956) (8,954) (38,550)
Exceptional items (4,000) - (4,000) (8,640) (9,092) (17,732)
Total
administrative
expenses 3 (14,467) (621) (15,088) (38,236) (18,046) (56,282)
Operating loss (9,513) (454) (9,967) (30,649) (12,991) (43,640)
Interest
receivable and
similar income 1,069 - 1,069 493 296 789
Interest payable
and similar charges (101) - (101) (99) (18) (117)
Loss on ordinary
activities before
taxation (8,545) (454) (8,999) (30,255) (12,713) (42,968)
Tax on loss on
ordinary activities (309) - (309) (126) (90) (216)
Loss on ordinary
activities after
taxation (8,854) (454) (9,308) (30,381) (12,803) (43,184)
Minority interest - - - 935 - 935
Loss for the
financial period (8,854) (454) (9,308) (29,446) (12,803) (42,249)
Dividends paid and
proposed - - - 22,701 (22,701) -
Loss for the
period retained
for equity
shareholders (8,854) (454) (9,308) (6,745) (35,504) (42,249)
Loss per share 4 Pence Pence Pence Pence Pence Pence
Basic and diluted (17.9) (0.9) (18.8) (13.6) (71.5) (85.1)
Before exceptional
items and dividends
(basic & diluted) (9.8) (0.9) (10.7) (41.9) (7.5) (49.4)
Unaudited interim condensed consolidated balance sheet
30 June 31 December 30 June
2003 2002 2002
Notes #000 #000 #000
Fixed assets
Intangible assets 5 2,267 4,582 16,049
Tangible assets 6,173 7,359 9,756
Investments 2,106 6,161 6,174
10,546 18,092 31,979
Current assets
Stocks 2 19 882
Debtors 9,920 15,008 17,471
Cash at bank and in
hand 14,638 17,883 23,059
24,560 32,910 41,412
Creditors (including
convertible debt):
amounts falling due
within one year (26,711) (28,892) (19,994)
Net current
(liabilities)/assets (2,151) 4,018 21,418
Total assets less
current liabilities 8,395 22,110 53,397
Creditors (including
convertible debt):
amounts falling due
after more than one
year (116) (1,905) (14,164)
Provision for
liabilities and (3,235) (3,808) -
charges
Net assets 5,044 16,397 39,233
Capital and reserves
Called up share
capital 538 535 514
Share premium
account 376,486 375,953 374,680
Shares to be issued 2,958 3,430 4,658
Merger reserve 609,409 609,409 609,409
Warrant reserve 21,501 21,501 21,501
Profit and loss (1,005,848) (994,431) (971,529)
account
Shareholders' funds - 6 5,044 16,397 39,233
equity
Unaudited interim condensed consolidated cash flow statement
Six months to Year to Six months to
30 June 31 December 30 June
Notes 2003 2002 2002
#000 #000 #000
Net cash flow
from operating
activities 7a (3,492) (17,466) (9,372)
Returns on
investments and
servicing of
finance 138 1,163 480
Taxation 19 392 540
Capital
expenditure (29) 3,114 470
Acquisitions and
disposals - 9,821 9,822
Net cash flow
before financing (3,364) (2,976) 1,940
Financing
Decrease in debt (122) (544) (388)
(Decrease)/
increase in cash
in the period (3,486) (3,520) 1,552
Unaudited interim reconciliation of net cash flow to movement in net debt
Six months to Year to Six months to
30 June 31 December 30 June
2003 2002 2002
#000 #000 #000
(Decrease)/increase in
cash in period (3,486) (3,520) 1,552
Cash flow from decrease
in debt and lease
repayments 122 588 432
Change in net funds
resulting from cash
flows (3,364) (2,932) 1,984
Exchange differences 241 162 265
Movement of net funds
in period (3,123) (2,770) 2,249
Net funds at beginning
of period 15,776 18,546 18,546
Net funds at period end 12,653 15,776 20,795
This information is provided by RNS
The company news service from the London Stock Exchange
END
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